European Commission to outline steps to set next emission targets

The European Commission, on a meeting set Dec. 9, 2014, will outline the next steps it plans to take to set carbon dioxide emission targets after 2021, giving a glimpse to carmakers on how much they have to further invest to achieve them.

Volkswagen Group chief executive Martin Winterkorn warned early October that it would be "fatal" to further strain the auto industry with stiffer carbon dioxide emission goals even before a market for non-conventional vehicles -- electric cars, plug-in hybrids and other models powered by alternative powertrains – could fully develop.

The European Commission has required carmakers to cut average carbon dioxide emissions from passenger vehicles from about 132g/km in 2012 to 95g/ km by 2021. Failure to do so means heavy fines. According to industry watchers, the next emission target is even more important as it will be stiffer and will further accelerate the push to electrification – which will surely affect bottom of carmakers and suppliers doing business in Europe.

In 2013, the European Parliament green-lighted an indicative CO2 emission target of between 68g/km and 78g/km by 2025. Industry watchers expect authorities to give carmakers until 2030, instead of 2025, to achieve a 75g/km target.

According to research by the European Union in 2012 assessing the impact of the current target, a 68g/km-78g/km target would imply that cars in Europe would have to be nearly fully hybridized.

Arndt Ellinghorst, automotive analyst at Evercore ISI, remarked that the next step in complying with the emission targets will be a “big one” since it means a significant electrification of powertrains – a move that needs more time to comply with.